Sunday, September 28, 2008

Based on a suggestion yesterday from a student in my MBA class (MGT 551 Business Economics), the graph above shows the declining share of disposable personal income (data) spent on food (data), clothing (data), and shelter (housing and household operation) since 1929. From a high of almost 59% in 1933, the percent of disposable income spent on food, clothing and shelter today has continually fallen, and today (2007) is only 33%.

The problem I have with these types of stats is...

People have taken the savings and put them into other spending categories...

Such as Cable TV... Internet... Mobile phones... 401k...

People have less money left over at the end of the month...

Funds are all allocated...

There is not much fat to cut in personal budgets...

You may not agree, that is OK.Takeaway: When Food, Fuel and Shelter costs rise rapidly there is no way for the average family to easily adjust to the new realities.